Question

Relevant information for Product A follows: Actual variable overhead cost per hour $8.00 Standard variable overhead cost per hour $7.50 Actual hours 4,500 Standard hours 5,000 What was the variable overhead spending variance for Product A?

Answer 1

Answer:

variable overhead spending variance = $2,250

Explanation:

given data

Actual variable overhead cost per hour = $8.00

Standard variable overhead cost per hour =  $7.50

Actual hours = 4,500

Standard hours = 5,000

to find out

variable overhead spending variance

solution

we know Actual hours  and Application rate  

so Total actual will be here = Actual hours  × Application rate    ..............1

Total actual = 4,500  × $8

Total actual = $36000

and

Total actual  Standard will be = Standard variable × Actual hours   .......2

Total actual for Standard will be = 4,500  × $7.50

Total actual for Standard = $33750

so

variable overhead spending variance = Total actual - Total actual for Standard   .........3

variable overhead spending variance = $36000 - $33750

variable overhead spending variance = $2,250